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Freight rates may be falling but liner companies still have substantial profits to spend. Having gorged on newbuilding orders, airlines and logistics, they are turning their attention to diversification. For instance, CMA CGM is expanding its media empire. The group owns two newspapers which reflect its southern French HQ, La Provence and Corse Matin, along with 10% of M6, a private TV network. It is now to buy La Tribune, the ‘French FT’, a daily financial newspaper, depending on regulatory approval. CMA CGM says that the move is both a diversification strategy and “a will to strengthen the local and national foothold of CMA CGM”. Shipping and media turn out to be more regular bedfellows than you might think. Print media may be more profitable than the liner trades just now. As the containerised freight market continues to slide, ZIM’s CFO Xavier Destriau has suggested that most liner companies will be trading at a loss currently, and that “unsustainable in the longer term” freight rates will have to rise. Destriau pointed to destocking in the US as a leading cause of weakness on transpacific routes in particular, and suggested that inventories would have to rise at some point. According to shipbroking firm Braemar, US port websites show a 19% year-on-year fall in US east coast throughput in April and a 26% fall in US west coast port throughput. Perhaps an agreement on the government debt ceiling would encourage retailers to restock. Maersk warned us in May of a “radically changed business environment” as it reported plunging first quarter results, though they were still ahead of analyst expectations. Operating profit was $2.3bn in Q1 – down by nearly 70% but still enough to buy a few radio stations and magazine publishers, if Maersk felt so inclined – on revenues of $14.2bn, themselves down by around 25%. Vincent Clerc, the CEO, noted that the high orderbook could affect the market balance this and next year while “it’s not like the macroeconomic backdrop points to a lot of growth to take care of this.” Like his contemporaries at ZIM, Clerc believes that the inventory correction currently plaguing container shipping markets will be over in the first half of the year and that restocking will begin in two to three months. Clerc noted that volumes in Maersk’s ocean business were down 9.4% in the first quarter while freight rates were down by 37%. Clerc also thinks that freight rates will stabilise near current levels due to “discipline and rationality” among the liners. Clerc may be encouraged by the slowing descent of containerised freight rates. The Freightos Baltic Container Index for the transpacific trade was rated at $1,312 per feu to the US west coast and $2,331 to the US east coast, on May 26. The west coast number was down 13% in a month and the east coast number was down 3%, having risen and fallen again during May. On the Asia-Europe routes via Suez, rates per feu to North Europe were reported at $1,420 on May 26, up 2% on the four-week ago rate, the first rise in five weeks. Rates to the Mediterranean were $2,446, down 1% over four weeks. But the percentage falls are in low single digits now after peaking at 20% to 30% a month earlier this year, so perhaps the long-awaited market nadir is approaching – the second half of the year is usually better for liners than the first half. In the Atlantic, rates on the westbound route from North Europe to the US were reported as being $2,151 on May 26, down 1% on the week but 35% on the month and half their level in mid-March. On the backhaul, rates are $356 per feu, down 9% on the week but up 7% on the month, though still on a downward trajectory over the year, as the rate was about $550 on January 1. The Freightos global containerised freight index was $1,411 on May 26, down 2% on the previous week, down 12% on the four-week-earlier number and down 35% on the $2,168 reported at the start of January. Low rates are not deterring further orders. Yang Ming has been lured into ordering five 15,000 teu dual-fuel LNG boxships in South Korea while French newcomer Zephyr & Boree has ordered five 1,300 teu ‘zero carbon’ ships at a sporting $62m each. The Maersk Mc-Kinney Moller Center for Zero Carbon Shipping plus partners Seaspan Corp., class society ABS and naval architects Foreship have reported a new 15,000 teu ammonia-powered containership design. The ship is part of the SABRE Consortium, a group of companies building ammonia bunkering infrastructure focused on Singapore. There are suggestions that a shortage of post-panamax vessels for period charter could drive more newbuilding orders on top of an orderbook which is already at a record level both in absolute numbers (7.7m teu) and as a percentage of the trading fleet (30%). No doubt the liner cycle is alive and well, with the added complication of renewing the fleet with low emission newbuildings.

Containers get into the news

Box titans become media moguls. How to spend those container billions.

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